Springs businessman indicted on fraud, racketeering charges

Brian Wellens of Colorado Springs has been indicted by a Denver grand jury on 20 counts of securities fraud, conspiracy to commit securities fraud and racketeering for allegedly using $8.5 million raised from 19 investors for his personal expenses and other businesses.
An arrest warrant has...

Brian Wellens of Colorado Springs has been indicted by a Denver grand jury on 20 counts of securities fraud, conspiracy to commit securities fraud and racketeering for allegedly using $8.5 million raised from 19 investors for his personal expenses and other businesses.

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An arrest warrant has been issued for Wellens, 42, who remains at large. A news release issued Wednesday by Denver District Attorney Mitchell Morrissey said the indictment resulted from a joint investigation by his office and the Colorado Division of Securities.

The indictment alleges Wellens promoted vacation home investments between 2006 and 2011 through his company, called Continental Resort Homes, but instead of buying vacation homes Wellens spent the money.

Wellens allegedly used the $8.5 million to make payments to investors in other ventures he controlled, make mortgage payments on his Broadmoor area home and two other homes in California and Arizona that Continental Resort Homes either never owned or didn’t yet own, rent payments on another Broadmoor area home, car payments on his personal vehicle, credit card payments for his expenses and to financially support unrelated companies he owned, the indictment said.

He also allegedly overstated the assets, capital contributions and number of investors in Continental Resort Homes and understated the company’s debts on its balance sheet, and allegedly lied to investors about the company owning two properties in which it had no ownership stake.

The 19 investors are unlikely to recover their money since the company had no assets as of Wednesday, the date the indictment was handed down.

The Securities Division disclosed last year it was investigating Wellens in connection with an alleged “multi-million dollar investment scheme” involving funds he raised for Continental Resort Homes, according to documents filed in Denver District Court made public when Wellens fought subpoenas from the division.

Wellens sought between $350,000 and $425,000 from up to 100 investors as an initial entry fee that would be pooled with 70 percent of the $39 million he hoped to raise to be used to buy vacation homes in Colorado and around the world, according to the indictment. Members, who also would pay an annual fee starting at $30,000, would be able to use the homes but also profit from their investment if a property was sold, the indictment said.

Wellens filed a Chapter 7 bankruptcy Nov. 1 listing $36.4 million in liabilities owed to 76 creditors and $2.08 million in assets.

If convicted, Wellens faces up to 24 years in prison on the most serious charge.